A Private Company Limited by shares (“LTD”) is the most common form of company incorporated in Ireland and has the contractual capacity of a natural person. LTDs are registered under Part 2 of the Companies Act 2014 (the “Act”) and are governed by the Act and its own constitution which may contain additional regulations.
To incorporate a LTD, the company must have at a minimum one director and a separate company secretary. The minimum age for a director is eighteen years and body corporates cannot be appointed as directors. If an individual is appointed as company secretary, they must also be eighteen years of age or over. A LTD must have one shareholder but no more than one hundred and forty-nine.
Personal details of the directors and company secretary will be publicly available upon registration of the LTD with the competent authority, the Companies Registration Office (the “CRO”). Changes to the directors and secretary must be notified to the CRO. In addition, the company has an annual requirement to file its Annual Return with the CRO. The Annual Return form B1 must be accompanied by the company’s financial statements, except for the six-month Annual Return.
There are a number of administrative benefits to a LTD such as sole director, dispense with the need to hold an Annual General Meeting, audit exemptions, not required to have an authorised share capital, amongst others.
A Designated Activity Company (DAC) is a new company type introduced by the Companies Act 2014 in June 2015. A DAC can be a private company limited by shares or a private company limited by guarantee and having a share capital. A DAC has the capacity to do only those acts set out in its memorandum of association. DACs are registered and governed under Part 16 of the Act and in addition, the company will be subject to additional regulations under its articles of association.
Unlike a LTD, a DAC must have two directors; one of whom may be appointed as company secretary and, the number of shareholders is limited to one hundred and forty-nine. Similar to a LTD, personal details of directors and company secretary will be publicly available and the same annual filing requirements with the CRO apply.
Certain business activities will stipulate the type of corporate entity required, while LTD’s are prohibited from carrying on as credit institutions, insurance companies and those engaged in debt securities listing; DACs are not.
A company registered as a DAC must end its company name with Designated Activity Company or abbreviation, DAC. Where a DAC has two or more members it cannot dispense with the requirement to hold an Annual General Meeting.
A partnership involves two or more people carrying on a common business. Most partnerships are unlimited liability ventures with all partners having joint and several liable for the debts of the business. Any business debts may be recoverable from partners’ personal as well as business assets. Personal debts may be recovered against a partner’s individual share of the business. A Partnership Deed will usually set out the rights, responsibilities and rewards of the partners. Unless such a Partnership Deed exists, the regulations set out in the Partnership Act 1890 apply. There is an obligation to register a business name with the CRO if the Partnership carries on other than in the surnames of the Partners.
The Companies Registration Office is the competent authority in Ireland for registering a LLP. Following registration, the CRO will issue a certificate of registration. A LLP must consist of a minimum of one general partner and at least one limited partner. The partnership should not consist of 20 persons. The LLP is not a separate legal entity and does not enter, in the legal sense, contract in its own name, but in the names of its partners.
The General partner’s liability is unlimited whereas the limited partner has limited liability up to the amount of capital contribution. The limited partner has no role in the management of the firm and has no power to bind the firm. The LLP is managed by the general partners who are liable for all debts and obligation of the partnership.
Annual compliance obligation can consist of, where all the general partner is limited companies, an obligation to submit financial statements to the CRO with six months of the financial year end.
A Branch must be registered where a company incorporated outside of Ireland establishes a business in Ireland. The Branch must be registered with the CRO within one month of establishment. Registration requirements depend on the jurisdiction of the foreign company. Branches are governed by Part 21 of the Companies Act 2014.
At least one-person resident in Ireland must be appointed as the person authorised to accept service on behalf of the Company in the State. In addition, a person must also be resident in Ireland to accept responsibility for ensuring that the branch complies with obligations under the legislation.
On an annual basis the branch is required to deliver a “return of accounting documents of an external company” to the CRO.
A sole trader is a person carrying on business on his/her own account. The business and personal affairs of the individual are not separated in any way. Any debts, whether business or personal, can be recovered against business and personal assets.
Accounting periods are governed by personal taxation considerations. The tax year for sole traders is the calendar year. Accounts have to be filed with the Revenue Commissioners by 31 October following the end of the tax year. All business profits are treated as income for the individual. Preliminary Income Tax is payable by 31 October of the tax year. Any balance of tax owing when the Revenue Commissioners make their tax assessment of the sole trader is payable by 31 October following the end of the tax year.
A PLC operates under Part 17 of the Act. A memorandum and articles of association form its constitution. PLC activities are limited to its objects as set out in the memorandum of association. A minimum share capital limit of €25,000 applies and of which at least 25% must be paid up on issue before the entity may commence trading.
The company must have two directors and a company secretary and there is no limit on the numbers of shareholders. The company does benefit from limited liability. A PLC is permitted to make public offering of its share capital and may list those shares on a stock exchange.
While the same annual filing requirements of a LTD with the CRO apply; the company must also hold an Annual General Meeting each year. There may be additional requirements depending on the nature of the company’s business and if the company’s securities are listed on the stock exchange.